ADVFN Morning Euro Markets Bulletin - August 26th 2010

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London Market Reports
Miners take the lead

Market Movers
techMARK 1,616.08 +0.67%
FTSE 100 5,152.34 +0.84%
FTSE 250 9,667.36 +0.46%

Miners are leading the way in early dealings on Thursday with Kazakhmys the best performer after the Kazakh firm’s half year figures were well received.

Industrial metals miner Kazakhmys said it remains positive on the copper market after an improvement in prices for the red metal helped it post a sharp rise in revenues and earnings in the six months to June 30. Revenues climbed to $1.52bn from $1.12bn over the same period a year ago, while underlying profits were up to $696m from $269m. Average copper prices climbed by 73% to $6,981.

Eurasian Natural Resources, Xstrata, Fresnillo and Rio Tinto are also among the top performers.

Industrial property owner SEGRO is the biggest faller despite having recently seen an encouraging increase in the levels of enquiries and growing interest in pre-let developments.The company hopes to capitalise on this growing level of interest after it managed to edge up net asset value (NAV) per share in a challenging first half of the year.

Full year results from Diageo showed a continuation of the improving trend seen in the Guinness brewer’s third quarter as developing markets drove overall growth while markets in North America and Europe remained weak. The group, famous for brands such as Smirnoff, Johnnie Walker, Captain Morgan and Baileys, said a stronger second half performance has driven full year growth.

Sales and underlying profits from security group G4S in the first half of 2010 were slightly ahead of market expectations, despite the trading environment remaining challenging. Group turnover was up 4% at constant exchange rates (CER) to £3,632.2m from £3,493m in the first half of last year. The market had pencilled in a figure of £3.6bn for sales.

Betting firm William Hill only posted a small rise in half year profits as gains from the football World Cup were partly offset by poor horseracing results. Pre-tax rose to £105.7m in the 26 weeks ended 29 June 2010 compared with £103.1m in the 26 weeks ended 30 June 2009. Turnover was up 12% to £8.64bn. The interim dividend is unchanged at 2.5p per share.

Russian gold miner Petropavlovsk fell into the red in the six months to June 30 after problems at its main mine led to a shortfall in production.

Student landlord Unite posted an 8% rise in adjusted fully diluted NAV per share and said it is well placed to build on progress over the remainder of 2010 and into 2011.

FTSE 100 - Risers
Kazakhmys (KAZ) 1,100.00p +2.52%
Eurasian Natural Resources (ENRC) 847.00p +2.42%
Inmarsat (ISAT) 677.00p +2.42%
Xstrata (XTA) 998.50p +2.29%
Barclays (BARC) 304.80p +2.28%
Fresnillo (FRES) 1,020.00p +2.26%
InterContinental Hotels Group (IHG) 1,022.00p +2.25%
Rio Tinto (RIO) 3,170.50p +2.11%
Shire Plc (SHP) 1,415.00p +2.02%
Sage Group (SGE) 244.00p +1.96%

FTSE 100 - Fallers
SEGRO (SGRO) 262.80p -4.44%
Diageo (DGE) 1,048.00p -1.69%
Essar Energy (ESSR) 390.00p -1.44%
Capital Shopping Centres Group (CSCG) 324.50p -0.28%
British Land Co (BLND) 448.50p -0.20%


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UK Event Calendar for today
INTERIMS
Amec, Asterand, Avis Europe, Biocompatibles International, Bloomsbury Publishing, Carillion, Chaucer Holdings, Chesnara, Churchill China, Communisis, CPP Group, Filtrona PLC, G4S, Henry Boot, Hikma Pharmaceuticals, Hunting, Huntsworth, IMI, International Public Partnerships Ltd., IP Group, Kazakhmys, Macfarlane Group, New World Resources, office2office, Petropavlovsk, Premier Oil, Public Power GDR (Reg S), Robert Walters, Salamander Energy, Savills, SEGRO, Signet Jewelers, Soco International, Sportech, STV Group, Unite Group, William Hill, X5 Retail Group GDR (Reg S)

INTERIM DIVIDEND PAYMENT DATE
Charter European Trust

INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Continuing Claims (US) (13:30)
GFK Consumer Confidence (GER) (07:00)
Initial Jobless Claims (US) (13:30)
M3 Money Supply (EU) (09:00)

GMS
DS Smith

FINALS
Diageo, Haynes Publishing Group, Impala Platinum

AGMS
Canisp, Phoenix IT Group, Plant Impact, Puma VCT I, Puma VCT II, Puma VCT III, Puma VCT IV

TRADING ANNOUNCEMENTS
Haynes Publishing Group

UK ECONOMIC ANNOUNCEMENTS
CBI Distributive Trends Surveys (11:00)


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Forex Market Reports
US data disappoints again, as weekly jobless figures await

If the markets had been looking for US economic data to start to improve yesterday they were sorely disappointed. It’s almost getting to the point that missing expectations with respect to US data is becoming the new normal, so often has it disappointed recently.

Yesterday US durable goods (excluding transportation) for July dropped 3.8%, much worse than expected, the biggest fall since the beginning of 2009, against an expectation of a 0.5% rise.

If that weren’t bad enough new home sales for July also disappointed, dropping by 12.4% to a record low, against an expectation of no change.

Surprisingly, given how poor the data was the US dollar lost ground as investors moved funds into the Swiss franc and the Japanese yen as well as into gold.

The yen was unable to build on its recent gains to new 15 year highs on concern that when Bank of Japan governor Shirakawa visits Jackson Hole this week, and the Federal Reserve’s annual symposium, he may come back and initiate further measures to try and weaken the yen.

Against the euro the Swiss franc continues to make new all-time highs, provoking some concern about possible direct Swiss National Bank intervention.

It would appear that the ripple effect of Ireland’s downgrade by Standard and Poor’s is also affecting bond spreads on Greek and Portuguese bonds, prompting new fears about capital flight from the euro zone, however slightly offsetting these concerns was improved German IFO business confidence which rose to its highest levels in three years in August.

Today’s US weekly jobless claims will be of particular interest after last weeks 500k number. Expectations are for a rise of 485k for this week and the hope is that the claims will soon stop rising, and won’t go beyond the psychologically important half a million level.

EURUSD – the single currency continues to hold above the 1.2605 50% retracement level for the time being. A failure to follow through to the downside could be the precursor to a rally back through this weeks highs and resistance around 1.2730/40 which was the extent of yesterday’s bounce.
A break and close below 1.2605 would target the 61.8% Fibonacci retracement level at 1.2435.
The 50 day MA resistance now at 1.2750 should also act as some form of barrier; however a break back above could well re-target longer term resistance around last week’s highs around 1.2920.

GBPUSD – the pound made another attempt to push lower yesterday but it continues to hold above the 50 day moving average in the short-term around 1.5370.
The cable needs to rally from these lows and get back and close above the 200 day moving average, now at 1.5465 for the downside risk to diminish somewhat.
The next level of support below the 50 day average should be around the 1.5320 level, which would be a 38.2% retracement of the up move from the 1.4230 lows to the recent highs around 1.6000. Expect to find resistance on any rallies towards Tuesday’s highs around 1.5475/80 as well as this week’s highs around 1.5620.

EURGBP – the euro soon gave back most of Tuesday’s gains running out of steam just short of the 0.8245/50 resistance level and highs of this week.
This failure to get back above this resistance level means that downward pressure should continue to prevail but we need to see the single currency close the week below 0.8165/70 level as it is the 50% retracement move of the 2007/2008 uptrend.
This would then increase the probability of a test of the previous lows at 0.8065/70, but also to open the possibility of further euro losses towards 0.7785, which would be a 61.8% retracement of the up move from the 2007 lows at 0.6535 to the 2008 highs at 0.9800.

USDJPY – The yen has stabilised somewhat after Japanese Finance Minister Noda stated he would respond to adverse yen moves in an appropriate fashion, whatever that means, with currency traders taking profit just above the new 15 year yen highs.
The new 15 year lows of 83.60 are now the next target to aim at as the market looks to test for further US dollar declines towards the 80.00 level.
The 84.75/85 level continues to act as resistance on any pullbacks, while behind that 86.25 is probably the larger resistance level.


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US Market Reports
Shares rally despite weak data

US shares rallied to close higher despite more disappointing US economic data today. Across the markets, the Dow finished 19 points higher at 10,060. Nasdaq added 17 points at 2,141. The S&P 500 gained 3 points to 1,055.

Durable-goods orders were up 0.3% in July. Analysts were looking for a 2.7% increase.

Even worse, was a 12% decline in annualised sales of new homes. There were annualised sales of new homes of 276,000 in July and that was the lowest since 1963. The median price of $204,000 was the lowest since 2003.

Despite the poor data, housebuilders rose on the back of Toll Brothers’ swing to a net profit of $27.3m compared with a loss of $472.3m a year earlier. DR Horton, which was upgraded to a buy by Ticonderoga Securities, is the second best performer on the S&P.

On the corporate front, AMR fell due to worries about a potential strike at American Airlines.

Electronic payment technology developer VeriFone Systems raised its 2010 profit forecast to $1.27 a share – more than 10% higher than previous expectations.

Apple is reportedly in talks with major TV companies to offer 99 cent rentals of television episodes, people familiar with the situation told the Wall Street Journal.

S&P 500 - Risers
Harman International Industries Inc. (HAR) $31.85 +5.53%
Sears Holdings Corp. (SHLD) $64.80 +4.87%
D. R. Horton Inc. (DHI) $10.43 +4.61%
Coventry Health Care Inc. (CVH) $20.27 +4.54%

S&P 500 - Fallers
Massey Energy Co. (MEE) $29.14 -3.38%
Dominion Resources Inc. (D) $43.15 -2.84%
Cabot Oil & Gas Corp. (COG) $27.97 -2.48%
Peabody Energy Corp. (BTU) $42.23 -2.27%

Dow Jones I.A - Risers
Home Depot Inc. (HD) $28.33 +1.98%
Kraft Foods Inc. (KFT) $29.59 +1.02%
Pfizer Inc. (PFE) $15.97 +0.95%
McDonald's Corp. (MCD) $73.19 +0.65%

Dow Jones I.A - Fallers
United Technologies Corp. (UTX) $65.26 -0.61%
Caterpillar Inc. (CAT) $64.70 -0.52%
Coca-Cola Co. (KO) $55.39 -0.49%
Hewlett-Packard Co. (HPQ) $38.24 -0.39%


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Thursday newspaper round-up
Polly Peck, BHP Billiton, Google

One of Britain's most notorious fugitives will return to the UK voluntarily today to face multimillion-pound fraud charges after almost two decades abroad, it was reported last night. Asil Nadir, 69, who was a Conservative party donor, fled to his native northern Cyprus in 1993 to avoid a £34m fraud trial centred on the collapse of his Polly Peck business empire, according to the Guardian.

Marius Kloppers refused to rule out a higher bid for PotashCorp of Saskatchewan yesterday, but warned that BHP Billiton would not overpay for the world's biggest fertiliser maker. Outlining details of the miner's strategy to take control of PotashCorp after details of the approach were made public last week, the BHP chief executive reiterated that its $130-a-share cash bid remains the only offer for the Canadian company, says the Independent.

Google is to go head-to-head with Skype by allowing users of its Gmail service to make telephone calls from their e-mail inbox. The internet giant already offered free voice and video calls via Gmail but will now allow email users to call landlines and mobile phones directly, writes the Times.

The Swiss franc has surged to an all-time high against the euro on capital flight from the eurozone after Irish, Greek, and Portuguese bonds came under renewed fire, reports the Telegraph.

Harry Thierens, BP’s vice president for drilling and completions, told a US political hearing that the blowout preventer was connected to a test pipe, rather than the correct one. “It would mean that the pipe rams could not be closed,” Mr Thierens said in evidence to a federal panel on Wednesday, according to the Telegraph.

Ireland’s National Treasury Management Agency accuses Standard & Poor’s of faulty analysis after its sovereign credit rating was downgraded to AA- and given a negative outlook — brought on by the agency increasing its estimate of the cost of shoring up the banking sector to €90 billion — a decision that pushed up the cost of borrowing for the Irish Government, says the Times.

Xchanging went on the offensive to try to stem the slide in its share price yesterday, staging a conference call with investors and analysts to counter “unfounded rumours” about its accounting practices. The company that processes claims for the Lloyd’s of London insurance market has seen its share price fall by 40 per cent over the past three weeks — but its unorthodox response served only to unsettle the market further and its stock lost 11 per cent, writes the Times.

KiFin, the investment group backed by South African billionaire Nathan Kirsh, has ratcheted up the row with Minerva, accusing the property group's management of "misleading" other shareholders into believing it wanted to seize control of the company, reports the Independent.